concurrent design and volume production. This has reduced parts incompatibility and allowed more time for resolving problems despite the shorter overall cycle time.
With early supplier involvement, prototypes are completed earlier, defects are found faster, and hard tooling is purchased only after most problems have been resolved. Tooling is purchased as much as 12 months closer to the initial production date, reducing the amount of tool rework, as well as the amount of capital invested.
As a result of longer commitments, suppliers have increased their own investments in assets dedicated to Chrysler, including plants, equipment, systems, processes, and people. Nearly all of them have purchased Chrysler's preferred computer-aided three-dimensional interactive application (CATIA) system, which is designed to enable concurrent engineering. With CATIA, the 1998 Concorde and Intrepid were designed and developed with an almost paperless process, reducing the development time for 1998 models by eight months and saving more than $75 million (Hong, 1998). Many suppliers have also relocated their facilities in closer geographical proximity to Chrysler plants.
The following factors were crucial to the transformation of Chrysler's supply chain (Dyer, 1996):
Strong, visionary leadership that drove the change to collaborative approaches for jointly creating value.
Multifunctional teams (''platform teams"), including suppliers' engineers, are now responsible for the product line, from concept through manufacturing, which has shortened the product development cycle. To speed up decision-making, platform teams include representatives of multiple functions, including engineering, manufacturing, finance, marketing, and procurement. This approach has stabilized priorities and reduced the conflicting demands to suppliers that were inherent in the old sequential development process.
Platform teams select suppliers early in the concept stage from lists of prequalified suppliers with the best track records and the most advanced engineering and manufacturing capabilities. Suppliers are given major responsibilities for component design, cost, quality, and on-time delivery. Suppliers indicate that this approach gives them greater flexibility to develop effective solutions to problems as they arise.